1. Tested with 2 unreachable nameservers at the beginning in resolv.conf.
2. Enable debug logs and restart SSSD.
3. Enumeration and auth works fine.
# time ssh -l puser1 localhost
puser1@localhost's password: 
Last login: Fri May 27 16:01:41 2011 from localhost.localdomain
Could not chdir to home directory /export/puser1: No such file or directory
-sh-3.2$ logout
Connection to localhost closed.

real	0m37.972s
user	0m0.004s
sys	0m0.004s

# rpm -qi sssd | head
Name        : sssd                         Relocations: (not relocatable)
Version     : 1.5.1                             Vendor: Red Hat, Inc.
Release     : 35.el5                        Build Date: Wed 25 May 2011 08:03:59 PM IST
Install Date: Thu 26 May 2011 03:52:52 PM IST      Build Host: x86-008.build.bos.redhat.com
Group       : Applications/System           Source RPM: sssd-1.5.1-35.el5.src.rpm
Size        : 3486777                          License: GPLv3+
Signature   : (none)
Packager    : Red Hat, Inc. <http://bugzilla.redhat.com/bugzilla>
URL         : http://fedorahosted.org/sssd/
Summary     : System Security Services Daemon

    Technical note added. If any revisions are required, please edit the "Technical Notes" field
    accordingly. All revisions will be proofread by the Engineering Content Services team.
    
    New Contents:
When the first DNS entry defined in the /etc/resolv.conf file was unreachable, SSSD failed to connect to any subsequent DNS server to resolve the SRV record. This caused SSSD to permanently operate in offline mode. This bug has been fixed and SSSD is now able to connect to an alternate server if the primary server is down.

An advisory has been issued which should help the problem
described in this bug report. This report is therefore being
closed with a resolution of ERRATA. For more information
on therefore solution and/or where to find the updated files,
please follow the link below. You may reopen this bug report
if the solution does not work for you.

http://rhn.redhat.com/errata/RHSA-2011-0975.html